1. As per the existing rules/regulations
only banks are being permitted to set up Automated Teller Machines
(ATMs) in India. Banks have played a major role in encouraging ATM
adoption and modifying behavioral strategies in the domain of personal
banking. The banking space has seen considerable growth through the
ATMs, (approximately 87000 ATMs at present) but the same has been
restricted principally to the urban/metro areas. Tier III to VI
unbanked/under banked areas have not witnessed much ATM presence.

2. Although there has been about 30%
year-on-year growth in the number of ATMs deployed in the country since
2008, ATM penetration on a per capita basis continues to be less
compared to other countries. There is, therefore, an abundant scope and a
felt need to deploy more ATMs, particularly in Tier III to VI areas of
the country.

3. In the above context, RBI has reviewed
the extant policy on ATMs and it has been decided to permit non-banks
to set up, own and operate ATMs to accelerate the growth and penetration
of ATMs in the country. Such ATMs will be in the nature of White Label
ATMs (WLA) and would provide ATM services to customers of all banks.

4. Non-bank entities proposing to set up
WLAs have to make an application to RBI for seeking authorization under
the Payment and Settlement Systems Act 2007. Such entities should have a
minimum net worth of Rs. 100 crore at the time of making the
application and on a continuing basis after issue of the requisite
authorization. Other guidelines for applying to RBI for authorization
under the PSS Act are available at rbidocs.rbi.org.in/rdocs/Publications/PDFs/86707.pdf. The criteria and the terms subject to which such entities will be authorized to operate WLAs are listed in Annex A. The roles and responsibilities of the stakeholders are indicated at Annex-’B’.

General Criteria for non-bank entities authorized by RBI to set up and operate WLAs

=> The authorized non-bank entity (henceforth referred to as WLA
Operator) would have the freedom to choose the location of the WLA.
However, it will adhere to annual targets and the ratio of WLA between
Tier I &II and Tier III-VI centres that may be stipulated by the
Reserve Bank of India.

=> Only the Cards issued by banks would be permitted to be used at the WLAs to start with.

=> Acceptance of deposits at the WLA site into the account of the WLA
operator or in any other account indicated by it shall not be permitted.

=> The WLA Operator will be the “acquirer” for all transactions at the WLA and earn his fee accordingly.

=> The WLA Operator would be permitted to earn extra revenue through
advertisement and by offering value added services. The advertisements
placed on such ATMs would be subject to Advertising Standards Council of
India (ASCI) codes and other regulations.

=> Being non-bank owned ATMs, the guidelines on five free transactions
in a month for using other bank ATMs would not be applicable for
transactions effected on the WLAs. The charges for the transactions
should be displayed on the screen before the customer initiates the
transaction.

=> The WLA Operator would not be entitled to any other fee from issuer
bank other than the “Interchange” fee payable to “acquirer” bank under
the present bank owned ATM scenario. The WLA Operator shall also not be
permitted to charge any fee from the customers for the use of the ATM
resources.

=> Regulatory guidelines relating to compensation for failed ATM transactions would apply to transactions at WLAs.

=> General guidelines governing the operations of the bank operated ATMs would apply mutatis mutandis to WLAs.

Annex-’B’

Roles and Responsibilities of various stakeholders in the WLA model

A. WLA Operator

=> Entities shall commence setting up and operating WLAs only after it
has been authorized to do so by the RBI under the Payment and Settlement
Systems Act, 2007.

=> WLA Operator shall declare one “Sponsor Bank” , who will serve as
the Settlement Bank for the settlement of all the service transactions
at the WLAs. The Sponsor Bank should be a member of one of the ATM
networks authorized by the RBI and also be a member of the RTGS.

=> Cash Management of the WLAs shall be entrusted to the Sponsor Bank,
who may have necessary arrangements in this regard with other banks for
servicing cash requirements at various places. At no point of time, the
WLA Operator or his agents shall have access to the cash at the WLAs.

=> Settlement of all the transactions at the ATMs shall be done only in
the books of the Sponsor Bank through the ATM Network with whom the WLA
Operator has established connectivity.

=> Maintenance and servicing of the WLAs shall be the sole responsibility of the WLA Operator.

B. Sponsor Bank

(I) Cash Management

=> Sponsor Bank would be responsible for cash management at the WLAs
and should ensure that the WLAs are adequately stocked with cash and
only good quality notes are dispensed to the users of the WLAs. As
regards availability of funds for cash loading, a suitable arrangement
would be entered into between the WLA and the Sponsor Bank

=> The ownership of the cash to be loaded into such WLAs Cash
Management will also include reconciliation of cash at the WLAs and
appropriate accounting of excess cash, if any, on account of partial or
no disbursal.

=> For the purpose of cash management, the Sponsor Bank may enter into
tie-ups with other banks for loading and reconciliation of cash at
various WLAs at locations where it has no presence. In such case, the
cash managing bank will have the same responsibilities as indicated at
(a) above.

(II) Customer Grievance Redressal

=> While the primary responsibility to redress grievance of customers
relating to failed ATM transactions will vest with the Issuing Bank, the
Sponsor Bank will provide necessary support in this regard, including
making available relevant records and information, to the Issuing Bank.
For this purpose, the Sponsor Bank should have necessary arrangement
with the WLA Operator.

=> The extant directives of the RBI on the time-lines for resolution of
complaints of failed ATM transactions would also apply to transactions
at the WLAs. For delay in resolution of such complaints attributable to
the Sponsor Bank or the WLA Operator resulting in payment of penalty to
the customer by the Issuing Bank in terms of the directives of RBI, the
Issuing Bank shall be compensated by the Sponsor Bank. The Sponsor Bank
may have appropriate agreements with the WLA Operator for recovery of
such amounts.

C. ATM Network Operators

=> Network Operators will offer direct connectivity to the WLA Operator
to facilitate transactions at the WLA and the settlement thereof after
seeking requisite approvals from the RBI.

=> They bring the WLA Operator under the ambit of the Network’s
Operating Guidelines and the Dispute Resolution Mechanism put in place
in accordance with the extant directives of the Reserve Bank of India.

D. General

=> The ATM Network Operator, the WLA
Operator and the Sponsor Bank shall enter into a Tri-partite Service
Level Agreements (SLA) to address issues relating to inter-bank
settlement of the transactions at the WLAs and settlement of customer
complaints relating to failed ATM transactions. The SLAs should clearly
spell out the role of each party.

=> The relevant provisions of all
guidelines/directives/instructions issued by various departments of the
Reserve Bank of India viz. Department of Payment & Settlement
Systems (DPSS), Department of Banking Operations and Development (DBOD)
and Customer Services Department (CSD) with reference to the services,
operations, security, etc. at the bank ATMs would also apply to the
WLAs.